SECURE, RELIABLE, HIGH-PERFORMANCE DATA CENTER SOLUTIONS CoreSite Realty Corporation, All Rights Reserved

Transcription

1 SECURE, RELIABLE, HIGH-PERFORMANCE DATA CENTER SOLUTIONS 2018 CoreSite Realty Corporation, All Rights Reserved

2 Table of Contents Earnings Release 3 Company Profile 8 Summary of Data 9 Consolidated Balance Sheets 10 Consolidated of Operations 11 Reconciliations of Net Income to FFO, AFFO, EBITDAre and Adjusted EBITDA 12 Properties 13 Leasing Statistics 14 Geographic and Vertical Diversification Largest Customers 17 Expenditures and Completed Pre-Stabilized Projects 18 Summary 19 Market ization and Debt Summary 20 Interest Summary and Debt Covenants 21 of Net Asset Value Guidance 23 Appendix 24 2

3 CoreSite Reports First-Quarter 2018 Results Reflecting Revenue Growth of 12.8% Year over Year DENVER, CO April 26, 2018 CoreSite Realty Corporation (NYSE:COR), a premier provider of secure, reliable, high-performance data center and interconnection solutions across the U.S., today announced financial results for the first quarter ended March 31, Quarterly and Subsequent Highlights First-quarter total operating revenues were $129.6 million, a 12.8% increase year over year First-quarter net income per diluted share was $0.59, a 22.9% increase year over year First-quarter funds from operations ( FFO ) was $1.27 per diluted share and unit, a 12.4% increase year over year Commenced 81,636 net rentable square feet (NRSF) of new and expansion leases representing $16.2 million of annualized GAAP rent at an average rate of $184 per square foot Renewed leases with annualized GAAP rent of $20.2 million, with rent growth of 5.6% on a cash basis and 11.5% on a GAAP basis, resulting in rental churn of 1.9% in the first quarter Executed 136 new and expansion data center leases for 29,624 NRSF, representing $7.1 million of annualized GAAP rent at an average rate of $239 per square foot, including 47 new customer logos On April 19, 2018, CoreSite closed on an amended and expanded credit facility with total borrowing capacity of $1.05 billion under all arrangements with its syndicate of banks, and extended the maturity of its credit line to 2022 On April 20, 2018, CoreSite closed on the acquisition of U.S. Colo, a carrier-neutral, network-dense colocation provider, located in Los Angeles, California, for approximately $8.6 million. The acquisition provides CoreSite with 120+ new customers, increases its economies of scale in downtown Los Angeles, and ends litigation that had been ongoing between CoreSite and U.S. Colo Our financial results demonstrate consistent execution and solid growth, with revenue, adjusted EBITDA, and FFO per share increasing 13%, 13%, and 12% year over year, respectively, said Paul Szurek, CoreSite s Chief Executive Officer. We had a number of positives this quarter, including strong cash rent growth on renewals, solid commencement activity and a 9% year-over-year increase in same-store monthly recurring revenue per cabinet equivalent, all leading to healthy organic growth. While demand remains strong, we entered the quarter with approximately 32% less available capacity in our four largest markets, limiting our sales opportunities for the quarter. The $7.1 million in annualized GAAP rent signed includes 47 new high-quality logos added to our ecosystem. Fortunately, near the end of the quarter, we restored capacity in these markets to more normal levels, which has increased our actionable sales funnel, and our construction pipeline is very active. Results CoreSite s net income attributable to common shares was $20.3 million, or $0.59 per diluted share, for the three months ended March 31, 2018, compared to $16.3 million, or $0.48 per diluted share for the three months ended March 31, Net income per diluted share increased 34.1% on a sequential-quarter basis. CoreSite s FFO per diluted share and unit was $1.27 for the three months ended March 31, 2018, an increase of 12.4% compared to $1.13 per diluted share and unit for the three months ended March 31, FFO per diluted share and unit increased 16.5% on a sequential-quarter basis. Excluding the non-cash expense related to the Guidance Appendix 3

4 original issuance costs of CoreSite s redeemed Preferred Stock in the fourth quarter of 2017, FFO per share increased 7.6% sequentially. Total operating revenues for the three months ended March 31, 2018, were $129.6 million, a 12.8% increase year over year and an increase of 2.9% on a sequential-quarter basis. Commencements and Renewals CoreSite s first-quarter data center lease commencements totaled 81,636 NRSF at a weighted average GAAP rental rate of $184 per NRSF, which represents $16.2 million of annualized GAAP rent. CoreSite s renewal leases signed in the first quarter totaled $20.2 million in annualized GAAP rent, comprised of 118,876 NRSF at a weighted-average GAAP rental rate of $170 per NRSF, a 5.6% increase in rent on a cash basis and an 11.5% increase on a GAAP basis. The first-quarter rental churn rate was 1.9%. As a result of renewals and growth in interconnection and power revenues, monthly recurring revenue per cabinet equivalent increased 9.3% over the prior-year period. Sales Activity CoreSite executed 136 new and expansion data center leases representing $7.1 million of annualized GAAP rent during the first quarter, comprised of 29,624 NRSF at a weighted-average GAAP rental rate of $239 per NRSF. and Acquisition Activity During the first quarter, CoreSite placed into service 87,263 square feet of turn-key data center capacity at LA2 in Los Angeles and 26,413 square feet of turn-key data center capacity at VA3 Phase 1A in Reston, Virginia. In addition, as of March 31, 2018, CoreSite had a total of 108,151 square feet of turn-key data center capacity under construction and had spent $39.7 million of the estimated $131.1 million required to complete the projects, which consist of the following. Reston CoreSite had 49,837 square feet of turn-key data center capacity under construction at VA3 (Phase 1B), inclusive of 9,837 square feet of the infrastructure building to support this phase of the data center campus. As of the end of the first quarter, CoreSite had incurred $31.4 million of the estimated $100.2 million required to complete VA3 Phase 1B and the infrastructure building, and expects to complete development in the first quarter of Washington D.C. CoreSite had 24,563 square feet of turn-key data center capacity under construction at DC2. As of the end of the first quarter, CoreSite had spent $5.6 million of the estimated $17.4 million required to complete the project, and expects to complete development in the third quarter of Denver CoreSite had 15,630 square feet of turn-key data center capacity under construction at DE1. As of the end of the first quarter, CoreSite had spent $1.5 million of the estimated $7.5 million required to complete this expansion, and expects to complete construction in the third quarter of New York CoreSite had 18,121 square feet of turn-key data center capacity under construction at NY2. CoreSite has spent $1.2 million of the estimated $6.0 million required to complete this expansion, and expects to complete development in the third quarter of Guidance Appendix 4

5 On April 20, 2018, CoreSite closed on the acquisition of U.S. Colo, a carrier-neutral, network-dense colocation provider, located in Los Angeles, California, for approximately $8.6 million. The acquisition provides CoreSite with more than 120 additional customers, increased economies of scale in downtown Los Angeles, and ends litigation that had been ongoing between CoreSite and U.S. Colo. CoreSite acquired all of the equity interests in U.S. Colo and its affiliates, resulting in the addition of two colocation suites in One Wilshire (LA1) and a colocation space in 800 South Hope Street, cumulatively totaling approximately 30,000 net rentable square feet. Balance Sheet and Liquidity As of March 31, 2018, CoreSite had net principal debt outstanding of $988.4 million, correlating to 3.4 times firstquarter annualized adjusted EBITDA. On April 19, 2018, CoreSite closed on an amended and expanded credit facility with $1.05 billion of total borrowing capacity under all arrangements with its syndicate of banks. As a result of the amendment, CoreSite extended its debt maturity profile, with its next tranche of debt not maturing until June The revolving credit facility amendment provides an incremental $100 million of borrowing capacity, bringing the capacity to $450 million and extends the primary term of the facility to April 2022, with a one-year extension option. In addition, CoreSite entered into a new five-year, $150 million term loan under the amended credit facility. This new loan matures in April 2023, and bears interest at a variable rate based on LIBOR. CoreSite elected to swap the variable interest rate associated with $75 million of the new term loan facility, to a fixed rate of approximately 4.11%. As of March 31, 2018, pro forma for the financing and related swap, CoreSite s ratio of fixed versus variable rate debt would be 47% fixed versus 53% variable, in line with CoreSite s stated goal of maintaining a balance between fixed and variable-priced instruments within its capital structure. The proceeds from the term loan are expected to be used to pay down a portion of the current revolving credit facility balance, to fund continued development across its portfolio, and for general corporate purposes. Including the increased liquidity resulting from the recent financing transactions, CoreSite had $381.7 million of total available liquidity, including cash on the balance sheet at March 31, Dividend On March 9, 2018, CoreSite announced a dividend of $0.98 per share of common stock and common stock equivalents for the first quarter of The first-quarter dividend was paid on April 16, 2018, to shareholders of record on March 29, Guidance CoreSite is maintaining its 2018 guidance of net income attributable to common shares in the range of $2.15 to $2.27 per diluted share. In addition, CoreSite is maintaining its guidance of FFO per diluted share and unit in the range of $4.92 to $5.04, with the difference between net income and FFO being real estate depreciation and amortization. This outlook is based on current economic conditions, internal assumptions about CoreSite s customer base, and the supply and demand dynamics of the markets in which CoreSite operates. The guidance does not include the impact of any future financing, investment or disposition activities, beyond what has already been disclosed. Guidance Appendix 5

6 Upcoming Conferences and Events CoreSite management will participate in the following investor conferences and events: A non-deal roadshow covering the Mid-Atlantic region and Boston on May 8-9, 2018; The J.P. Morgan 46th Annual Global Technology, Media and Communications Conference on May 16, 2018, at The Westin Boston Waterfront in Boston, Massachusetts; REITWeek: NAREIT's Investor Forum from June 5-7, 2018, at the New York Hilton Midtown in New York, New York; and The 6th Annual William Blair Technology Company Growth Conference on June 13, 2018, at the Four Seasons Hotel in Chicago, Illinois. Conference Call Details CoreSite will host a conference call on April 26, 2018, at 12:00 p.m., Eastern Time (10:00 a.m., Mountain Time), to discuss its financial results, current business trends and market conditions. The call will be accessible by dialing (domestic) or (international). A replay will be available until May 10, 2018, and can be accessed shortly after the call by dialing (domestic) or (international). The passcode for the replay is Interested parties may also listen to a simultaneous webcast of the conference call by logging on to CoreSite s website at and clicking on the Investors link. The on-line replay will be available for a limited time beginning immediately following the call. About CoreSite CoreSite Realty Corporation (NYSE:COR) delivers secure, reliable, high-performance data center and interconnection solutions to a growing customer ecosystem across eight key North American markets. More than 1,250 of the world s leading enterprises, network operators, cloud providers, and supporting service providers choose CoreSite to connect, protect and optimize their performance-sensitive data, applications and computing workloads. Our scalable, flexible solutions and 450+ dedicated employees consistently deliver unmatched data center options all of which leads to a best-in-class customer experience and lasting relationships. For more information, visit CoreSite Contact Greer Aviv Vice President of Investor Relations and Corporate Communications Greer.Aviv@CoreSite.com Guidance Appendix 6

7 Forward Looking This earnings release and accompanying supplemental information may contain forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as believes, expects, may, will, should, seeks, approximately, intends, plans, pro forma, estimates or anticipates or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and that do not relate solely to historical matters. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and contingencies, many of which are beyond CoreSite s control, that may cause actual results to differ significantly from those expressed in any forward-looking statement. These risks include, without limitation: the geographic concentration of the company s data centers in certain markets and any adverse developments in local economic conditions or the demand for data center space in these markets; fluctuations in interest rates and increased operating costs; difficulties in identifying properties to acquire and completing acquisitions; significant industry competition; the company s failure to obtain necessary outside financing; the company s ability to service existing debt; the company s failure to qualify or maintain its status as a REIT; financial market fluctuations; changes in real estate and zoning laws and increases in real property tax rates; and other factors affecting the real estate industry generally. All forward-looking statements reflect the company s good faith beliefs, assumptions and expectations, but they are not guarantees of future performance. Furthermore, the company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. For a further discussion of these and other factors that could cause the company s future results to differ materially from any forward-looking statements, see the section entitled Risk Factors in the company s most recent annual report on Form 10-K, and other risks described in documents subsequently filed by the company from time to time with the Securities and Exchange Commission. Guidance Appendix 7

8 Company Profile CoreSite delivers secure, reliable, high-performance data center and interconnection solutions to a growing customer ecosystem at 20 operating data centers across eight key North American Markets. Secure, Reliable and Compliant 100% uptime Service Level Agreement guarantees our reliability commitment to customer applications Physical security standards and rigorous internal security training enable compliance with regulatory requirements Consistent compliance across all properties SOC 1 & SOC 2 Type 2 reviews ISO certified Payment Card Industry Data Security Standard compliant HIPAA validation Scalable Serving customer requirements from half cabinet to full buildings 20 operating data centers in eight of the largest commercial and data center markets in the United States Ability to increase occupied data center footprint on land and buildings currently owned and under contract, including current space unoccupied, under construction and held for development, by approximately 1.7 million NRSF, or 79% of currently occupied space High-Performance Interconnection Cloud-enabled, network-rich data center buildings and campuses Over 420 network service providers supported by robust interconnection services to key public clouds 25,000+ interconnections Enabling enterprises with support ecosystems High-Quality Customer Experience 450+ professionals with dedicated industry expertise supporting over 1,250 customers Experienced and committed operations, facilities and security personnel 24/7 customer support and remote hands Dedicated implementation resources to ensure a successful onboarding process Guidance Appendix 8

9 Summary of Data (in thousands, except per share, NRSF and MRR data) Three Months Ended March 31, December 31, March 31, Growth % Summary of Results Y/Y GAAP Measures revenues $ 129,619 $ 125,946 $ 114, % Net income 28,566 27,008 25, Net income attributable to common shares 20,302 14,912 16, Net income attributable to common shares per share - diluted $ 0.59 $ 0.44 $ REIT Measures Funds from operations (FFO) to shares and units $ 60,998 $ 52,224 $ 54, % Funds from operations (FFO) to shares and units, as adjusted (1) 60,998 56,550 54, Adjusted funds from operations (AFFO) 57,045 43,675 48, EBITDAre 70,113 66,296 62, Adjusted EBITDA 72,878 68,755 64, FFO per common share and OP unit - diluted $ 1.27 $ 1.09 $ FFO per common share and OP unit - diluted, as adjusted (1) $ 1.27 $ 1.18 $ (1) FFO available to shares and units, as adjusted, during the three months ended December 31, 2017, excludes $4.3 million, or $0.09 per share and unit, of non-cash charge related to the original issuance costs associated with our redeemed preferred stock. As of March 31, December 31, September 30, June 30, March 31, Dividend Activity Dividends declared per share and OP unit $ 0.98 $ 0.98 $ 0.90 $ 0.90 $ 0.80 TTM FFO payout ratio 82.6 % 81.0 % 77.4 % 72.4 % 66.9 % TTM AFFO payout ratio (1) 93.9 % 93.4 % 90.2 % 84.0 % 75.1 % Statistics data center properties Stabilized data center NRSF 2,164,778 2,067,257 2,025,594 2,025,594 1,987,231 Stabilized data center NRSF occupied 2,021,268 1,951,491 1,891,014 1,900,699 1,881,908 Stabilized data center % occupied 93.4 % 94.4 % 93.4 % 93.8 % 94.7 % Turn-Key Data Center ("TKD") Same-Store Statistics MRR per Cabinet Equivalent $ 1,458 $ 1,446 $ 1,414 $ 1,369 $ 1,334 TKD NRSF % occupied 89.1 % 88.7 % 85.2 % 85.6 % 84.8 % Market ization, Principal Debt & Preferred Stock Total enterprise value $ 5,832,403 $ 6,420,488 $ 6,288,910 $ 5,866,955 $ 5,164,449 Total principal debt outstanding $ 991,500 $ 944,500 $ 794,000 $ 775,000 $ 723,000 Total principal debt and preferred stock outstanding (2) $ 991,500 $ 944,500 $ 909,000 $ 890,000 $ 838,000 Net Principal Debt to: Annualized Adjusted EBITDA 3.4 x 3.4 x 3.0 x 2.9 x 2.8 x Enterprise Value 16.9 % 14.6 % 12.6 % 12.8 % 14.0 % Net Principal Debt & Preferred Stock (2) to: Annualized Adjusted EBITDA 3.4 x 3.4 x 3.5 x 3.3 x 3.2 x Enterprise Value 16.9 % 14.6 % 14.4 % 14.8 % 16.2 % (1) The TTM AFFO payout ratio included $13.1 million, $11.9 million, $3.3 million, and $3.0 million as of March 31, 2018, December 31, 2017, September 30, 2017, and June 30, 2017, respectively, of recurring capital expenditures associated with replacing our chiller plant at LA2 that we expect to generate a significant return on investment. (2) On December 12, 2017 we redeemed our preferred stock at par value plus accrued dividends. Guidance Appendix 9

10 Consolidated Balance Sheets (in thousands, except per share data) March 31, 2018 December 31, 2017 (1) Assets: Investments in real estate: Land $ 97,295 $ 97,258 Buildings and improvements 1,651,967 1,561,056 1,749,262 1,658,314 Less: Accumulated depreciation and amortization (500,961) (473,141) Net investment in operating properties 1,248,301 1,185,173 Construction in progress 121, ,903 Net investments in real estate 1,370,290 1,348,076 lease right-of-use assets 88,781 92,984 Cash and cash equivalents 3,079 5,247 Accounts and other receivables, net 25,078 28,875 Lease intangibles, net 5,727 6,314 Goodwill 40,646 40,646 Other assets, net 106, ,501 Total assets $ 1,640,414 $ 1,625,643 Liabilities and equity: Liabilities Debt, net $ 986,974 $ 939,570 lease liabilities 97, ,912 Accounts payable and accrued expenses 64,036 77,170 Accrued dividends and distributions 48,678 48,976 Acquired below-market lease contracts, net 3,314 3,504 Unearned revenue, prepaid rent and other liabilities 36,778 34,867 Total liabilities 1,237,088 1,206,999 Stockholders' equity Common stock, par value $ Additional paid-in capital 460, ,495 Accumulated other comprehensive income 1, Distributions in excess of net income (191,013) (177,566) Total stockholders' equity 270, ,020 Noncontrolling interests 132, ,624 Total equity 403, ,644 Total liabilities and equity $ 1,640,414 $ 1,625,643 (1) Adoption of the new lease accounting standard required that we adjust the consolidated balance sheet as of December 31, 2017, to include the recognition of additional right-of-use assets and lease liabilities for operating leases. See the filed Form 10-Q for additional information. Guidance Appendix 10

11 Consolidated of Operations (in thousands, except share and per share data) Three Months Ended March 31, December 31, March 31, revenues: Data center revenue: (1) Rental revenue $ 71,033 $ 68,373 $ 64,251 Power revenue 36,403 36,528 30,861 Interconnection revenue 16,560 16,255 14,512 Tenant reimbursement and other 2,572 1,847 2,276 Total data center revenue 126, , ,900 Office, light-industrial and other revenue 3,051 2,943 3,021 Total operating revenues 129, , ,921 expenses: Property operating and maintenance 33,848 34,722 29,226 Real estate taxes and insurance 4,937 3,963 4,504 Depreciation and amortization 33,776 32,629 32,338 Sales and marketing 5,080 4,616 4,503 General and administrative 9,185 10,157 8,124 Rent 6,400 6,155 5,962 Transaction costs Total operating expenses 93,282 92,279 84,657 income 36,337 33,667 30,264 Interest expense (7,738) (6,635) (5,107) Income before income taxes 28,599 27,032 25,157 Income tax expense (33) (24) (97) Net income 28,566 27,008 25,060 Net income attributable to noncontrolling interests 8,264 6,099 6,684 Net income attributable to CoreSite Realty Corporation 20,302 20,909 18,376 Preferred stock dividends (1,671) (2,084) Original issuance costs associated with redeemed preferred stock (4,326) Net income attributable to common shares $ 20,302 $ 14,912 $ 16,292 Net income per share attributable to common shares: Basic $ 0.60 $ 0.44 $ 0.49 Diluted $ 0.59 $ 0.44 $ 0.48 Weighted average common shares outstanding: Basic 33,935,564 33,893,021 33,558,787 Diluted 34,164,235 34,145,280 33,981,776 (1) Upon the anticipated issuance by the Accounting Standards Board ( FASB ) and adoption of proposed targeted improvements to the new lease accounting standard, we intend to combine data center rental, power, and tenant reimbursements and other revenue into a single line item. We expect the FASB to approve these changes during the later part of Q and will then incorporate the following changes during our Q reporting: Three Months Ended March 31, December 31, March 31, Rental revenue $ 71,033 $ 68,373 $ 64,251 Power revenue 36,403 36,528 30,861 Tenant reimbursement and other 2,572 1,847 2,276 Rental, power, and related revenue $ 110,008 $ 106,748 $ 97,388 Guidance Appendix 11

12 8 Reconciliations of Net Income to FFO, AFFO, EBITDAre and Adjusted EBITDA (in thousands, except per share data) Reconciliation of Net Income to FFO Three Months Ended March 31, December 31, March 31, Net income $ 28,566 $ 27,008 $ 25,060 Real estate depreciation and amortization 32,432 31,213 31,029 FFO $ 60,998 $ 58,221 $ 56,089 Preferred stock dividends (1,671) (2,084) Original issuance costs associated with redeemed preferred stock (4,326) FFO available to common shareholders and OP unit holders $ 60,998 $ 52,224 $ 54,005 Original issuance costs associated with redeemed preferred stock 4,326 FFO available to common shareholders and OP unit holders, as adjusted (1) $ 60,998 $ 56,550 54,005 Weighted average common shares outstanding - diluted 34,164 34,145 33,982 Weighted average OP units outstanding - diluted 13,835 13,836 13,851 Total weighted average shares and units outstanding - diluted 47,999 47,981 47,833 FFO per common share and OP unit - diluted $ 1.27 $ 1.09 $ 1.13 FFO per common share and OP unit - diluted, as adjusted (1) $ 1.27 $ 1.18 $ 1.13 (1) FFO available to shares and units, as adjusted, during the three months ended December 31, 2017, excludes $4.3 million, or $0.09 per share and unit, of non-cash charge related to the original issuance costs associated with our redeemed preferred stock. Reconciliation of FFO to AFFO Three Months Ended March 31, December 31, March 31, FFO available to common shareholders and unit holders $ 60,998 $ 52,224 $ 54,005 Adjustments: Amortization of deferred financing costs Non-cash compensation 2,626 2,401 1,802 Non-real estate depreciation 1,344 1,416 1,309 Original issuance costs associated with redeemed preferred stock 4,326 Straight-line rent adjustment (1,450) (677) (1,566) Amortization of above and below market leases (175) (170) (124) Recurring capital expenditures (1) (3,172) (10,949) (2,582) Tenant improvements (1,437) (1,466) (1,848) ized leasing costs (2,255) (3,875) (3,071) AFFO available to common shareholders and OP unit holders $ 57,045 $ 43,675 $ 48,294 (1) Recurring capital expenditures for the three months ended March 31, 2018, and December 31, 2017, includes $1.2 million and $8.6 million, respectively, of recurring capital expenditures associated with replacing our chiller plant at LA2 that we expect to generate a significant return on investment. Reconciliation of Net Income to EBITDAre and Adjusted EBITDA (1) Three Months Ended March 31, December 31, March 31, Net income $ 28,566 $ 27,008 $ 25,060 Adjustments: Interest expense 7,738 6,635 5,107 Income taxes Depreciation and amortization 33,776 32,629 32,338 EBITDAre $ 70,113 $ 66,296 $ 62,602 Non-cash compensation 2,626 2,401 1,802 Transaction costs / litigation Adjusted EBITDA $ 72,878 $ 68,755 $ 64,404 (1) We have adopted the NAREIT defined definition of EBITDAre, see the appendix for additional information. Guidance Appendix 12

13 8 Properties Data Center NRSF Annualized Stabilized Pre-Stabilized Total Held for Rent Percent Percent Percent NRSF Under Market/Facilities ($000) (1) Total Occupied (2) Total Occupied (2) Total Occupied (2) Construction NRSF Total NRSF San Francisco Bay SV1 $ 6,241 85, % % 85, % 85,932 SV2 8,359 76, , ,676 Santa Clara campus 68, , , , , ,500 San Francisco Bay Total 82, , , , , ,108 Los Angeles One Wilshire campus LA1* 30, , , , ,405 LA2 42, , , , , ,890 LA3 180, ,000 Los Angeles Total 72, , , , , ,295 Northern Virginia VA1 29, , , , ,719 VA2 17, , , , ,446 VA3 1,025 52, ,413 79, ,171 DC1* 3,326 22, , ,137 DC2* 24,563 24,563 Reston Campus Expansion (3) 49, , ,975 Northern Virginia Total 51, , , , , ,138 1,090,011 New York NY1* 5,296 48, , ,404 NY2 13, , , , , ,251 New York Total 18, , , , , ,655 Chicago CH1 19, , , ,407 CH2 (4) 175, ,000 Chicago Total 19, , , , ,407 Boston BO1 18, , , , , ,676 Denver DE1* 2,806 9, , , ,630 29,784 DE2* 465 5, , ,140 Denver Total 3,271 14, , , ,630 34,924 Miami MI1 1,512 30, , ,154 43,330 Total Data Center Facilities $ 268,451 2,164, % 210, % 2,375, % 108,151 1,283,686 3,767,406 Office & Light-Industrial 8, , , ,575 Reston Office & Light- Industrial (3) 2, , , (150,375) Total $ 278,812 2,676, % 210, % 2,887, % 108,151 1,133,311 4,128,981 * Indicates properties in which we hold a leasehold interest. (1) On a gross basis, our total portfolio annualized rent was approximately $285.7 million as of March 31, 2018, which includes $6.9 million in operating expense reimbursements under modified gross and triple-net leases. (2) Includes customer leases that have commenced as of March 31, If all leases signed during the current and prior periods had commenced, the percent occupied would have been as follows: Percent Leased Stabilized Pre-Stabilized Total Total Data Center Facilities 94.3 % 41.2 % 89.6 % Total 92.7 % 41.2 % 89.0 % (3) Included with our Reston Campus Expansion held for development space is 150,375 NRSF which is currently operating as office and light-industrial space. (4) On January 29, 2018, we acquired a two-acre land parcel located in Chicago, Illinois, with a total real estate cost of $4.5 million. We plan to build a turn-key data center on the acquired land parcel, which we refer to as CH2, upon the receipt of necessary permits and entitlements. See Appendix for definitions. Guidance Appendix 13

14 8 Leasing Statistics Data Center Leasing Activity GAAP GAAP Leasing Number Annualized Total Annualized Rental Cash GAAP Activity of Rent Leased Rent per Churn Rent Rent Period Leases (1) ($000) NRSF Leased NRSF Rate Growth Growth New/expansion leases commenced Q $ 16,184 (2) 81,636 $ 184 (2) Q ,219 52, Q ,855 21, (3) Q ,580 25, Q ,121 37, New/expansion leases signed Q $ 7,067 29,624 $ 239 Q ,219 41, Q ,099 40, (3) Q ,918 (2) 51, (2) Q ,701 46, Renewal leases signed Q $ 20, ,876 $ % 5.6 % 11.5 % Q ,156 78, Q ,370 80, Q ,934 83, (4) Q ,885 95, (1) Number of leases represents each agreement with a customer; a lease agreement could include multiple spaces and a customer could have multiple leases. (2) GAAP annualized rent includes contractual payments related to reserved dedicated expansion space, however, such amount is excluded in calculating the GAAP annualized rent per leased NRSF rate. (3) During Q3 2017, we signed and commenced a highly dense capacity expansion at our Santa Clara campus. (4) During Q2 2017, $4.1 million in annualized rent associated with a previously restructured lease at our Santa Clara campus expired resulting in rental churn of 1.7%. New/Expansion Leases Signed by Deployment Size by Period Q Q Q Q Q GAAP Annualized Rent ($000) Core Retail Colocation < 1,000 NRSF $ 2,657 $ 3,521 $ 2,180 $ 3,208 $ 3,292 1,000-5,000 NRSF 1,829 2,053 2,001 1,667 3,050 Total Core Retail Colocation $ 4,486 $ 5,574 $ 4,181 $ 4,875 $ 6,342 Scale Colocation > 5,000 NRSF 2,581 1,645 5,918 7,043 3,359 Total GAAP Annualized Rent $ 7,067 $ 7,219 $ 10,099 $ 11,918 $ 9,701 MRR per Cabinet Equivalent Billed (TKD Same-Store) (1) (1) During the first quarter of 2018, we updated the same-store turn-key data center pool to include all space available for lease that existed as turnkey data center space as of December 31, The MRR per Cabinet Equivalent for all periods reported was updated to reflect the new samestore pool. Guidance Appendix 14

15 8 Leasing Statistics Lease Distribution (total portfolio, including total data center and office and light-industrial OLI ) Total Percentage Percentage Number Percentage of Total Annualized of Total of of All NRSF of Rent Annualized NRSF Under Lease Leases Leases Leases NRSF ($000) Rent Unoccupied data center % 271, % $ % Unoccupied OLI 73, Data center NRSF: 5,000 or less 2, , , ,001-10, , , ,001-25, , , Greater than 25, , , Powered shell , , OLI , , Total 2, % 2,887, % $ 278, % Lease Expirations (total portfolio, including total data center and office and light-industrial OLI ) Total Annualized Number Percentage Percentage Annualized Annualized Rent Per of NRSF of of Total Annualized of Total Rent Per Rent at Leased Leases Expiring Rent Annualized Leased Expiration NRSF at Year of Lease Expiration Expiring (1) Leases NRSF ($000) Rent NRSF ($000) (2) Expiration Unoccupied data center 271, % $ % $ $ $ Unoccupied OLI 73, , , , , , , , , , , , , , , , Thereafter , , , OLI (3) , , , Total / Weighted Average 2,300 2,887, % $ 278, % $ 109 $ 311,346 $ 122 (1) Includes leases that upon expiration will automatically be renewed, primarily on a year-to-year basis. Number of leases represents each agreement with a customer; a lease agreement could include multiple spaces and a customer could have multiple leases. (2) Represents the final monthly contractual rent under existing customer leases as of March 31, 2018, multiplied by 12. This amount reflects total annualized base rent before any one-time or non-recurring rent abatements and excludes operating expense reimbursements, power revenue and interconnection revenue. Leases expiring during 2018 include annualized rent of $13.5 million associated with lease terms currently on a monthto-month basis. (3) The office and light-industrial leases are scheduled to expire as follows: NRSF of Annualized Expiring Rent Year Leases ($000) ,846 $ 1, ,929 1, ,002 1, ,723 1, ,014 1, Thereafter 153,170 4,201 Total OLI 438,684 $ 10,361 Guidance Appendix 15

16 8 Geographic and Vertical Diversification Geographical Diversification Percentage of Total Data Metropolitan Market Center Annualized Rent San Francisco Bay 30.9 % Los Angeles 26.9 Northern Virginia 19.2 Chicago 7.3 New York 7.0 Boston 6.9 Denver 1.2 Miami 0.6 Total % Vertical Diversification Percentage of Total Data Vertical Center Annualized Rent Enterprise 48.0% Cloud 28.2 Network 23.8 Total 100.0% Guidance Appendix 16

17 8 10 Largest Customers 10 Largest Customers (total portfolio, including data center and office and light-industrial) Weighted Percentage Percentage Average Number Total of Total Annualized of Total Remaining of Occupied Rent Annualized Lease Term in CoreSite Vertical Customer Industry Locations NRSF NRSF (1) ($000) Rent (2) Months (3) 1 Cloud Public Cloud 6 90, % $ 17, % 95 2 Cloud Public Cloud , , Enterprise Travel / Hospitality 3 90, , Cloud Public Cloud 3 116, , Enterprise SI & MSP 3 63, , Enterprise Digital Content 6 86, , Enterprise Hardware / Electronics 3 16, , Enterprise SI & MSP 2 22, , Network Global Carrier 6 27, , Enterprise Software 1 30, , Total/Weighted Average 836, % $ 98, % 46 (1) Represents the customer s total occupied square feet divided by the total operating NRSF in the portfolio as of March 31, (2) Represents the customer s total annualized rent divided by the total annualized rent in the portfolio as of March 31, (3) Weighted average based on percentage of total annualized rent expiring calculated as of March 31, Guidance Appendix 17

18 8 Expenditures and Completed Pre-Stabilized Projects (in thousands, except NRSF and cost per NRSF data) Expenditures and Repairs and Maintenance Three Months Ended March 31, December 31, September 30, June 30, March 31, Data center expansion (1) $ 44,977 $ 45,518 $ 46,282 $ 29,966 $ 22,644 Non-recurring investments (2) 1,577 2,679 2,960 2,724 3,301 Tenant improvements 1,437 1,466 1,252 2,198 1,848 Recurring capital expenditures (3) 3,172 10,949 3,219 6,975 2,582 Total capital expenditures $ 51,163 $ 60,612 $ 53,713 $ 41,863 $ 30,375 Repairs and maintenance expense (4) $ 3,158 $ 3,682 $ 4,476 $ 3,508 $ 3,109 (1) Data center expansion capital expenditures include new data center construction, development projects adding capacity to existing data centers and other revenue generating investments. Data center expansion also includes investment of Deferred Expansion. During the three months ended September 30, 2017, we incurred $12.2 million to acquire a two acre land parcel adjacent to our existing Santa Clara campus, which we refer to as SV8. During the three months ended March 31, 2018, we incurred $4.5 million to acquire a two acre land parcel located in Chicago, Illinois, which we refer to as CH2. (2) Non-recurring investments include upgrades to existing data center or office space and company-wide improvements that are ancillary to revenue generation such as internal system development and system-wide security upgrades, which have a future economic benefit. (3) Recurring capital expenditures include required equipment upgrades within our operating portfolio, which have a future economic benefit. During the three months ended March 31, 2018, December 31, 2017, September 30, 2017, and June 30, 2017, we incurred $1.2 million, $8.6 million, $0.3 million, and $3.0 million, respectively, or $13.1 million in aggregate, associated with replacing our chiller plants at LA2 that we expect to generate a significant return on investment. (4) Repairs and maintenance expense is classified within property operating and maintenance expense in the consolidated statements of operations. These expenditures represent recurring maintenance contracts and repairs to operating equipment necessary to maintain current operations. Completed Pre-Stabilized Projects Metropolitan Cost Per Percent Percent Projects/Facilities Market Completion NRSF Cost (1) NRSF Leased (2) Occupied LA2 Los Angeles Q ,965 $ 7,717 $ % 70.2 % VA2 Phase 4 Northern Virginia Q ,440 13, SV7 San Francisco Bay Q ,885 58, DE1 Denver Q ,341 6,206 1, BO1 Boston Q ,735 7, VA1 Northern Virginia Q ,087 1, LA2 Los Angeles Q ,925 11, VA3 Phase 1A Northern Virginia Q ,413 17, Total completed pre-stabilized 210,791 $ 122,620 $ % 39.3 % (1) Cost includes capital expenditures related to the specific project / phase and, for VA2, also includes allocations of capital expenditures related to land and building shell that were incurred during the first phase of the overall project. (2) Includes customer leases that have been signed as of March 31, 2018, but have not commenced. The percent leased is determined based on leased NRSF as a proportion of total pre-stabilized NRSF. Guidance Appendix 18

19 8 Summary (in thousands, except NRSF) Under Construction Held for (1) Costs Estimated Estimated Incurred to- Estimated Percent Power Projects/Facilities Completion NRSF Date Total Leased NRSF Total Cost (Megawatts) Data center expansion BO1 $ $ % 59,884 $ 32, DC2 Q ,563 5,616 17,400 DE1 Q ,630 1,473 7, LA1 10,352 1, LA2 29,770 10, MI1 13,154 7, NY2 Phase 3-4 Q ,121 1,154 6,000 69,176 51, NY2 Phase 5 47,211 35, Total 58,314 $ 8,243 $ 30, % 229,547 $ 136, Deferred expansion capital 3,942 7,400 25,000-35,000 Total data center expansion 58,314 $ 12,185 $ 38, % 229,547 $ 161, , New development CH2 (2) $ $ % 175,000 $ 190, , LA3 180, , , SV8 175, , , VA3 Phase 1B & C (3) Q ,837 31, ,200 49,837 25,000-35, Future Phases (4) 474, , , Total new development 49,837 $ 31,421 $ 100,200 % 1,054,138 $ 915,000-1,065, Total development (5) 108,151 $ 43,606 $ 138, % 1,283,685 $1,076,950-1,236, (1) These estimates are based on our current construction plans and expectations regarding entitlements. These estimates are subject to change based on current economic conditions, final zoning approvals, and the supply and demand dynamics of the market. (2) On January 29, 2018, we acquired a two-acre land parcel located in Chicago, Illinois, with a total real estate cost of $4.5 million. We plan to build a turn-key data center on the acquired land parcel, which we refer to as CH2, upon the receipt of necessary permits and entitlements. (3) As part of VA3 Phase 1B, we will build the shell of an 80,000 NRSF, 12 megawatt building, and a 77,000 NRSF centralized infrastructure building which will serve the entire VA3 property. Upon completion of VA3 Phase 1B, we will deliver 6 megawatts and 49,837 TKD NRSF. The centralized infrastructure building represents approximately $24 million of the estimated Phase 1B cost. The full construction of the 12 megawatt TKD building (Phase 1B and Phase 1C) will cost approximately $1,306 per NRSF, of which 6 megawatts is planned to be delivered with Phase 1C. (4) The Reston Campus Expansion project is estimated to deliver 611,000 NRSF of incremental data center capacity (of which 26,413 NRSF was placed into service in Q and 49,837 NRSF is under construction) across multiple phases with new buildings and as existing light-industrial / flex office leases expire and customers vacate. Based on our entitlement application, we believe we may be able to build an additional 286,000 NRSF for a total of 897,000 NRSF of incremental data center capacity. These estimates are subject to change based on current economic conditions, final zoning approvals, and the supply and demand dynamics of the market. The chart assumes the minimum expected zoning entitlement. (5) In addition to new development and incremental capacity in existing core and shell buildings, we have available acreage we own adjacent to our existing NY2 building in the form of an existing parking lot. By utilizing this land, we believe we can build approximately 100,000 NRSF of data center capacity in Secaucus, New Jersey, upon receipt of necessary entitlements. Guidance Appendix 19

20 8 Market ization and Debt Summary (in thousands, except per share data) Market ization Shares or Market Price / Equivalents Liquidation Value as of Market Value Outstanding March 31, 2018 Equivalents Common shares 34,454 $ $ 3,454,379 partnership units 13, ,386,524 Total equity 4,840,903 Total principal debt outstanding 991,500 Total enterprise value $ 5,832,403 Net principal debt to enterprise value 16.9 % Debt Summary (1) Outstanding as of: Maturity March 31, December 31, Instrument Rate Date (2) Revolving credit facility (3) 3.43 % 6/24/2019 $ 216,500 $ 169, Senior unsecured term loan (4) /24/ , , Senior unsecured term loan (3) /2/ , , Senior unsecured term loan (5) /19/ , , Senior unsecured notes /15/ , , Senior unsecured notes /20/ , ,000 Total principal debt outstanding 991, ,500 Unamortized deferred financing costs (4,526) (4,930) Total debt $ 986,974 $ 939,570 Weighted average interest rate 3.55 % Floating rate vs. fixed rate debt 55% / 45% 52% / 48% (1) During April 2018, we amended our credit agreement to increase the revolving credit facility by $100 million and enter into a new five-year $150 million senior unsecured term loan maturing in April 2023, which was used to pay down a portion of the current revolving credit facility balance. See the filed Form 10-K, 10-Q, and 8-K filed on April 20, 2018, for information on specific debt instruments. (2) In accordance with the amended credit agreement, the maturity date of the revolving credit facility will be extended to April 2022, with a one-time extension option, which, if exercised, would extend the maturity date to April (3) The revolving credit facility and 2021 senior unsecured term loan interest rates are based on 1-month LIBOR at March 31, 2018, plus applicable spread. (4) Represents the effective interest rate as a result of the interest rate swap associated with $75 million in 1-month LIBOR variable rate debt and $75 million unhedged debt based on 1-month LIBOR plus applicable spread. (5) Represents the effective interest rate as a result of the interest rate swap associated with $50 million in 1-month LIBOR variable rate debt and $150 million unhedged debt based on 1-month LIBOR plus applicable spread. Debt Maturities (including subsequent financing transactions and use of proceeds to pay down a portion of the revolving credit facility and extend the maturity date of the revolving credit facility) Guidance Appendix 20

21 8 Interest Summary and Debt Covenants (in thousands) Interest Expense Three Months Ended March 31, December 31 March 31, Interest expense and fees $ 8,275 $ 7,241 $ 5,298 Amortization of deferred financing costs ized interest (1,103) (1,051) (560) Total interest expense $ 7,738 $ 6,635 $ 5,107 Percent capitalized 12.5 % 13.7 % 9.9 % Debt Covenants Revolving Credit Facility and Senior Unsecured Term Loans and Notes March 31, December 31, September 30, June 30, March 31, Required Compliance 2018 (1) Fixed charge coverage ratio (2) Greater than 1.70x 8.6 x 6.5 x 7.4 x 7.6 x 8.6 x Total indebtedness to gross asset value Less than 60% 26.8 % 26.7 % 23.8 % 23.6 % 22.4 % Secured debt to gross asset value Less than 40% % % % % % Unhedged variable rate debt to gross asset value (3) Less than 30% 14.6 % 13.9 % 10.3 % 9.8 % 12.2 % Revolving credit facility availability $ 450,000 $ 350,000 $ 350,000 $ 350,000 $ 350,000 Borrowings outstanding (66,500) (169,500) (19,000) (223,000) Outstanding letters of credit (4,879) (4,879) (3,480) (4,480) (4,480) Current availability $ 378,621 $ 175,621 $ 327,520 $ 345,520 $ 122,520 (1) During April 2018, we amended our credit agreement which increased our revolving credit facility availability by $100 million and we entered into a new five-year $150 million senior unsecured term loan maturing in April 2023, which was used to pay down a portion of the current revolving facility balance. The revolving credit facility availability, borrowings outstanding, and current availability as of March 31, 2018, have been adjusted to reflect these subsequent debt financing transactions. (2) During April 2018, we amended our credit agreement which reduced the required compliance on our fixed charge coverage ratio to greater than 1.50x for our revolving credit facility and senior unsecured term loans. (3) During April 2018, we amended our credit agreement which removed the debt covenant related to unhedged variable rate debt to gross asset value for our revolving credit facility and senior unsecured term loans. Guidance Appendix 21

22 of Net Asset Value (NAV) (in thousands) Cash Net Income Reconciliation of Net Income (NOI) Q Annualized Income $ 36,337 $ 145,348 Adjustments: Depreciation and amortization 33, ,104 General and administrative (includes litigation expenses) 9,185 36,740 Transaction costs Net Income $ 79,354 $ 317,416 Cash Net Income (Cash NOI) Net Income $ 79,354 $ 317,416 Adjustments: Straight-line rent (1,450) (5,800) Amortization of above and below-market leases (175) (700) Cash NOI $ 77,729 $ 310,916 Cash NOI with backlog (89.0% leased) (1) $ 81,371 $ 325,484 Cash stabilized NOI (93% leased) $ 85,028 $ 340,112 Projects Data Center Projects Under Construction TKD construction in progress (2) $ 39,664 Remaining spend (2) 91,436 Total $ 131,100 Targeted annual yields % Annualized pro forma NOI range $ 15,700-21,000 Deferred Expansion in progress $ 3,942 Remaining spend (3) 3,458 Total $ 7,400 Other Assets and Liabilities Other Assets Remaining construction in progress (4) $ 78,383 Cash and cash equivalents 3,079 Accounts and other receivables 25,078 Other tangible assets 34,416 Total other assets $ 140,956 Liabilities Principal debt $ 991,500 Accounts payable, accrued expenses and other liabilities 100,814 Accrued dividends and distributions 48,678 Total liabilities $ 1,140,992 Weighted average common shares and units - diluted 47,999 (1) Cash NOI with backlog is adjusted to include one quarter of the cash backlog as of March 31, 2018, less any leasing of currently occupied NRSF and data center projects under development. (2) Does not include spend associated with leasing commissions. See page 19 for further breakdown of data center projects under construction. (3) Does not include spend associated with future Deferred Expansion. (4) Represents the book value of in-progress capital projects, including land and shell building, of future data center expansion, non-recurring investments, tenant improvements and recurring capital expenditures. Guidance Appendix 22